Penalizing carriers for missing appointments opens the door to vicarious liability
Q We are a carrier, and our major shipper has asked us to sign a new contract that provides we will be responsible for any charges assessed if we cannot keep a delivery appointment. We notoriously are delayed by the shipper in making pickups and cannot make deliveries effectively within the hours-of-service requirements. The problem with just-in-time shipper demands only seems to be getting worse. What recourse do we have?
A Draconian just-in-time delivery penalties are common occurrences in shipper contracts. They present serious safety problems for both the shipper and the carrier and must be opposed. Because of hours-of-service restraints, many consignees attempt to impose strict unloading time limits in an effort to preserve just-in-time inventory control. This presents transit demands that exceed reasonable dispatch and might encourage or require carriers to exceed hours of service under jeopardy of unspecified penalties.
Plaintiff’s bar can seize on these contract provisions to suggest that the driver was forced to speed or exceed the allotted driving time in order to keep appointments. You should explain to the customer that such contract provisions only heighten the possibility that it would be named in a vicarious liability suit.
As the recent Illinois court confirmation of the judgment against C.H. Robinson in the Sperl case demonstrates, in contracting with a carrier, the one who hires it cannot micromanage the carrier’s operation or insist upon prescribing the time of delivery without incurring significant possible vicarious liability consequences. Shippers must learn that freight must be shipped earlier and carriers must be paid to wait in order to continue the benefits of just-in-time inventory control without jeopardy.
Draconian just-in-time delivery penalties must be opposed.
This problem also has come to the attention of the federal government and has been studied by the General Accounting Office, and the issue is being addressed in proposed legislation. In addition, the Federal Motor Carrier Safety Administration’s Motor Carrier Advisory Committee has released a proposal for new federal regulations that would require consignees to unload carriers within a prescribed time under penalty of mandatory detention.
Mandatory detention rules are an old concept imposed during the days of regulation by the Interstate Commerce Commission, but it appears that the just-in-time inventory savings that were recognized when carriers had the freedom to use flexible sleeper berths and off-duty time is at an end. As carriers increasingly have been straight-jacketed by stricter hours-of-service requirements, the problem of making and keeping delivery appointments has been exacerbated. However, penalizing carriers for not making appointments clearly is not the answer.
A carrier cannot be expected to provide only reasonable dispatch. The old rules provided that a consignee must unload a carrier within two hours of delivery or pay detention as long as the carrier arrived during ordinary business hours. It appears that this standard is soon to return in view of increased hours-of-service constraints and re-regulation.
You certainly do not want to require or permit a driver to exceed the hours of service or the speed limit in order to make a set appointment time, nor do you want a driver to be involved in an accident caused as a result. Accordingly, you must say no to these types of provisions.
– Henry Seaton is a transportation lawyer who represents carriers.